Insurers ordered to pay out €400,000 over ‘unjustified’ delay in claim settlement

In a landmark judgment, which is set to upset the insurance sector, the court ordered Joseph N. Tabone, as representative of Citadel Insurance Plc - who broker for Italian assurer Assitalia Spa - to immediately liquidate €383,000 to the Malta Stock Exchange which had taken out an insurance policy on the life of its late chairman in 1992.

The court ordered the claim to be immediately liquidated with full interest at eight percent, as it applied an article of the law, which condemned the insurers for "unjustified late payment."

The Malta Stock Exchange, represented by its then chairman Joseph Zammit Tabona in 2007, had filed for legal redress asking the courts to liquidate Lm100,000 which was the sum insured with Citadel Insurance for his predecessor, who had been covered for indemnity for a business trip to Brussels, Brazil and Argentina in November 1992.

Camilleri had died tragically while in Brazil together with his brother, however Citadel Insurance had refused to settle the claim on the basis that the former MSE's chairman's life was not covered by the policy at the time of his decease. It also argued that MSE failed to reveal material facts that affected the risk covered by the Insurance policy.

In 1999, a court had ruled that irrespective of the cause of death, the policy was valid and Citadel Insurance had to pay out the claim.

However, when Citadel had approached MSE for full and final settlement, MSE had argued that an additional eight percent interest had to be included in the payment, amounting to a total of Lm115,000 equivalent to €269,743.77.

While Citadel contested this claim, another case was filed by MSE, this time requesting the courts to impose the additional interest on the sum assured which had to be paid out.

In his judgment, Mr. Justice Zammit McKeon ruled that MSE were correct to claim interest on the sum assured, amounting to a total of €269,743.77, but also added that he was applying an article in the law, which imposed a further eight percent on the insurers for  "unjustified delay" in settling the claim.

The judgment led to the insurers to be ordered to liquidate almost €400,000 to MSE and the heirs to the late Alfred Camilleri.

Lawyer Vincent Falzon appeared for the Malta Stock Exchange and the heirs to Camilleri, while Prof. Ian Refalo appeared for Citadel Insurance.